Audit, Compliance and Risk Blog

On April 29 the US Supreme Court reversed a lower court decision, reinstating US Environmental Protection Agency (EPA) rules requiring states to control emissions of air pollutants that contaminate downwind states (EPA v. EME Homer City Generation, LP). The Cross-State Air Pollution Rule (CASPR, or the “Transport Rule”) implements “Good Neighbor” provisions in the Clean Air Act (CAA) designed to ensure that upwind states’ emissions don’t prevent a downwind state from meeting air quality standards. This ruling frees EPA to implement rules requiring tighter emission controls on pollutant sources in upwind states.

What Does EPA’s Transport Rule Address?

One of CAA’s most basic purposes is to define “ambient air quality” with respect to specified pollutants, and to establish mechanisms to attain and maintain healthful ambient air quality. This process starts when EPA defines a pollutant that meets its criteria as a public health threat—the so-called “conventional” or “criteria” pollutants such as sulfur dioxide (SO2) and nitrogen oxides (NOx). Then EPA sets National Ambient Air Quality Standards (NAAQSs) for each, typically as maximum concentrations in ambient air measured over specified time periods (annual, 8-hour, etc.). Next, EPA requires each state to establish a State Implementation Plan (SIP), with pollution monitoring and controls intended to ensure that every area of every state attains NAAQSs, which are considered to provide “clean air.”

Over the decades, it has become obvious that air contaminants emitted in one area can travel downwind to pollute downwind areas. To address this issue, CAA includes the so-called “Good Neighbor Rule”, requiring SIPs to prohibit in-state sources “from emitting any air pollutant in amounts which will . . . contribute significantly” to downwind States’ “nonattainment . . . , or interfere with maintenance,” of any NAAQS (42 USC sec. 7410(a)(2)(D)).

Easier said than done. Air pollutants are emitted from myriad sources, into complex and changing air patterns, and combine and decay as they travel. By the time they arrive in a downwind state, they can be thoroughly mixed and changed, and once there they blend with pollutants emitted locally.

EPA has attempted to address these complex issues three times, in 1998 (with the “NOx SIP Call"), 2005 (Clean Air Interstate Rule), and 2011 (Transport Rule). Each rulemaking attempts to relate upwind emissions to downwind pollution, and to assign states appropriate duties. In the Transport Rule, EPA conducts a two-step review:

First, do emissions from an upwind state contribute more than 1% of the NAAQS concentration to any downwind state? States with emissions below this screening threshold were not subject to further requirements (screening review).

Second, EPA modeled emissions and control costs, and assigned upwind states emissions budgets intended to support NAAQS attainment in downwind states at reasonable upwind costs (control analysis).

When EPA issued the Transport Rule, it simultaneously found that upwind states had failed to address their downwind pollution, and issued federal implementation plans (FIPs) requiring the states to meet the emission budgets in the Transport Rule. These simultaneous rules prevented states from developing their own SIPs.

What Issues Were Litigated?

A group of upwind state and local governments sued EPA, charging that the Transport Rule violated several of EPA’s mandates under CAA. The federal Court of Appeals for the District of Columbia Circuit agreed with two of the states’ claims: that promulgating FIPs without giving states time to develop SIPs violated CAA procedural requirements; and that EPA’s two-step screening and control process failed to ensure appropriate and proportionate compliance burdens. The Circuit Court reinstated the earlier CAIR rule pending EPA’s promulgation of a valid successor to both CAIR and the Transport Rule.

EPA instead appealed, and a majority of the Supreme Court reversed the Circuit Court opinion and reinstated the Transport Rule. Six justices signed the majority opinion, Justices Scalia and Thomas dissented, and Justice Alito took no part in the case.

Now What?

With the Transport Rule reinstated, EPA’s FIPs are now enforceable, including the requirements for state emissions budgets. These cover NOx, ozone, and or particulate emissions from power plants in 34 Midwestern and Northeastern states. As of this writing, EPA is still reviewing the decision and will decide how to proceed.

Implementation Checklist

Does my organization own or operate a fossil fuel-fired power plant in one of the states subject to CAIR and/or the Transport Rule?

If so, is it subject to CAIR and/or Transport Rule requirements, as promulgated by EPA in rules or FIPs?

For any such facility, has my organization investigated ways to reduce emissions of covered air pollutants, if required to do so by EPA or a state in order to implement CAIR and/or the Transport Rule?

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).